Westpac third-quarter profit up 27%, Market flat despite post-election uncertainty: Economy Roundup

Westpac has recorded a 27% increase in third-quarter profit to $1.4 billion, saying it will continue to act conservatively given the volatile global economy.

Chief executive Gail Kelly said in a statement that conditions around the world will continue to put pressure on how Westpac does business.

“The Australian economy is robust but conditions in Europe and signs of slowing growth in the US continue to create global uncertainty,” Westpac chief executive Gail Kelly said in the lender’s third quarter trading update.

“In these circumstances we believe it is prudent to maintain our very strong capital levels and provisioning coverage…The uncertainty also supports our decision to lengthen the term of our wholesale funding and increase Westpac’s holdings of liquid assets.”

Impairment charges fell to $300 million, while total revenue fell about 1%.

Meanwhile, Ansell has recorded a 1.6% decrease in net profit after tax to $119.4 million, with the gloves and condom maker saying economic volatility is still posing a threat.

“While Ansell exited F10 with solid momentum, economic uncertainty in key markets remains a concern,” the company said in a statement.

EBIT rose to $143.1 million, although sales were down 9% to $1.23 billion.

“Sales were up solidly across all our businesses with Occupational and Professional growing strongly at the EBIT (earnings before interest and tax) line as well,” chief executive Magnus Nicolin said in a statement. “Consumer was disappointing but plans are in place to turn this around.”

Caltex profit has plummeted 61% to $141.65 million in the six months to 30 June, with the company saying a strong Australian dollar and volatile markets are both putting pressure on the company’s business.

Revenue was up by 3% to $9.04 billion, although production volume declined due to maintenance at two refineries.

“Singapore refiner margins were stronger than expected due to the weakness in the Tapis crude price relative to other crudes,” the company said in a statement.

“However, the higher average Australian dollar during the period, compared with the same period in 2009, resulted in a lower Australian dollar Caltex Refiner Margin.”

Shares flat despite uncertainty surrounding federal election

The Australian sharemarket has opened flat today, despite the uncertainty surrounding the federal election. Currently both Julia Gillard and Tony Abbott are wooing independents in the hope of forming a government this week.

The benchmark S&P/ASX200 index was up four points or 0.1% to 4435.3 at 12.15 AEST, while the Australian dollar has taken a plunge to US88c. The bonds market also opened softer.

Westpac shares lost 2.3% to $22.13, while Commonwealth Bank gained 0.1% to $49.57. ANZ gained 1% to $23.00 as AMP lost 1% to $4.90.

Meanwhile, Prime Infrastructure Group has recorded a full-year loss of almost $1 billion, while announcing it will merge with the US-owned Brookfield Infrastructure Partners.

The company recorded a $948.59 million net loss for the year, with revenue also falling by 6.7% to $499.23 million.

“The first six months of the 2010 Financial Year was a period of significant challenge to Prime Infrastructure,” the company said in a statement.

“The recapitalisation resulted in offering investors a simpler capital structure, with internalised management and the support of a strong cornerstone investor.”

Boart Longyear has recorded net profit for the six months to 30 June of $US32.7 million, up from $US5.36 million during 2009.

“Boart Longyear’s operating trends continue to improve and demand for products and services continue to be robust,” the company said in a statement.

Total revenue for the half-year was $US685.41 million, up by 48% from the previous corresponding period.

“The period-on-period increase is primarily attributable to the improvement of the worldwide economic outlook that has positively impacted our drilling services and products businesses,” Boart Longyear said.

“This significant improvement in earnings represents a return to Boart Longyear’s historic earnings growth, and gives us the ability to both increase our 2010 earnings guidance and to pay an interim dividend,” Chief executive Craig Kipp said in a statement.

Elsewhere, shares in Lihir Gold and Newcrest mining have been placed in trading halts, while shareholders vote on the Newcrest $9.5 billion takeover offer.

SABMiller looks at Foster’s for $12b

In London, the Sunday Times has reported the country’s second largest brewer, SABMiller, is considering buying the beer operations of Foster’s Group for $12.2 billion.

If such a deal goes ahead, analysts point out it would be in a position to challenge the world’s largest brewer, Anheuser-Busch Inbev.

Back home, Challenger Financial Services has recorded net profit of $282.5 million for the 12 months ending at 30 June, compared to the $90.7 million loss recorded in the prior corresponding period. Revenue was down 2.3% to $1.634 billion.

“We believe the Life business will continue to benefit from a structural increase in demand for guaranteed, fixed rate products such as annuities and are committed to driving growth in this product category,” chief executive Dominic Stevens said in a statement.

“An ageing population is on our side, as is the emerging realisation that share market volatility has delivered a lot of pain for little gain, even over the longer term.”